A Closer Look at Renren Inc. (NYSE:RENN)

August 17, 2016Gregory Miller

Shares of Renren Inc. (NYSE:RENN) have drawn some interest from traders recently as their share price moved -5.10%, reaching a price of $1.86 on recent trading.

The commodity is 5.50% away from the 20-Day Simple Moving Average. Their 50-Day Simple Moving Average is a difference of 1.67% from the current levels. Moving further back, the 200-Day Simple Moving Average is a -34.77% difference from today’s price. As it stands today, the stock is -17.33% from its 50-Day High and 23.18% from the 50-day low.

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Renren Inc.’s performance this year to date is -49.46%. The stock has performed -3.63% over the last seven days, 6.29% over the last thirty, and -18.06% over the last three months. Over the last six months, Renren Inc.’s stock has been -37.16% and -49.32% for the year.

When delving into penny stock trading, you must decide whether the risk is worth the reward. Penny stocks can be extremely attractive. Hollywood often makes trading or selling stocks look easy and fun, while millions of dollars are made.

It’s important to know that there is significant risk involved when investing in penny stock trading. Risks can range from something as simple as market volatility to something much more serious, such as completely fake shell companies created for the sole purpose of the “pump and dump”, where brokers promote the stock until prices rise, then dump the stock, leaving poorly informed investors to take the loss.

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It is easy to get caught up in the hype of penny stock email newsletters. Though the newsletters are a helpful resource to get ideas, prudent investors still have to do their own due diligence. Some penny stock newsletters have a disclaimer at the bottom that reads something like “We are not advisors, we’ve received compensation and we may own shares.” Further research must be done to find out if a company actually has operations or is simply someone’s home office. Often, when a promotional campaign has been created, there are larger shareholders selling shares they might have had for years, waiting for a chance to recoup their investments.

This doesn’t mean that so-called “fake” companies aren’t good for short-term trading, though. If you are in the market with disposable money in order to simply make a quick trade, what a company does is less important than making a win on a trade.

In this case, things like stock promotions can be a benefit as they bring more hype to a dark or defunct company. Look at a promotion on a company last year, Cynk Technology (CYNK), which ended up moving from 6 cents to as high as $21.95. The company itself had very little to offer as far as operations or fundamentals, and its stock price was purely driven by trading activity.

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